Trojans are a type of computer virus; programs written by an attacker to be placed on a victim's computer to serve the uses of the attacker. Often they come through e-mail, chat rooms and downloads. Trojans get their name from the fact that these programs look like an innocent file, maybe a game or a legitimate utility. However, when the victim installs or runs the program it secretly installs malware on the victim's computer.
Many Trojans just continue to earn their name by using information that they find on the host computer to send copies of themselves to other addresses, often using the e-mail address book of the victim.
Some of the worst Trojans, however, are spyware. They actually collect personal information from files on the computer or perform key logging to collect account IDs and passwords. It reports this information back to the attacker.